A third-generation family-owned manufacturing business decided to sell a large interest in the business to a nonfamily member. The California-based family realized that the way they managed the business following the partial sale would have to change, and the family needed guidance on how to make the transition. The family would become less involved in the business’s day-to-day management, and there would be less transparency about performance and strategy.
BBH conducted a detailed review of the many trusts that owned an interest in the business and learned that the trustee wanted to be replaced. The trustee, a beloved uncle, did not know the new management team and thought that a professional trustee would be a better fit to exercise the family trusts’ rights in the business following the sale. BBH Trust Company of Delaware became trustee, and the trusts’ law and tax residence was immediately changed to Delaware. The shift to Delaware provided several advantages to the trust beneficiaries, such as enhanced asset protection, and nearly eliminated all California state income tax on the trusts. BBH Trust Company worked in-depth with each trust beneficiary to establish a new budget and estate plan to account for the significant increase in family wealth as a result of the transaction.
Since the sale many years ago, BBH hosts biannual family shareholder meetings where the family can engage management regarding the performance and strategy surrounding the business. We conduct interviews with each family member prior to the meeting to understand each family shareholder’s questions and to anonymize sensitive topics. BBH also helps management prepare for these family shareholder meetings so that the family will feel that their questions and concerns are being addressed.